$0, and the face amount of all outstanding Letters of Credit is $1,568,391.87 and thateach Borrower is unconditionally liable to Bank for such amounts, together with all accrued andunpaid interest and expenses through the date hereof, without any set-off, deduction,counterclaim or defense.     **3. FURTHER ASSURANCES**          Each Borrower hereby agrees to take all such actions and to execute and/or deliver to Bankall such agreements, instruments, certificates, assignments, financing statements and otherdocuments, as Bank may reasonably require from time to time, to effectuate and implement thepurposes of this Amendment.     **4. CONFIRMATION OF COLLATERAL**          Each Borrower covenants, confirms and agrees that as security for the repayment of theObligations, Bank has, and shall continue to have, and is hereby granted a continuing lien onand security interest in the Collateral (including the Smith Barney Securities), all whethernow owned or hereafter acquired, created or arising, including all proceeds thereof. EachBorrower acknowledges and agrees that nothing herein contained in any way impairs Bank’sexisting rights and priority in the Collateral.     **5. REPRESENTATIONS AND WARRANTIES**          Each Borrower warrants and represents to Bank that:          5.1 By execution of this Amendment, Borrowers confirm that all representationsand warranties made by Borrowers to Bank shall be true and correct in all materialrespects, with thesame effect as though the representations and warranties had been made on and as of thedatehereof, except to the extent such representation and warranty are made as of a specificprior date.          5.2 The execution and delivery by each Borrower of this Amendment and theperformance of the transactions herein contemplated (i) are and will be within its power,(ii) havebeen authorized by all necessary action, and (iii) are not and will not be in contraventionof anyorder of court or other agency of government, of law, of any organization document of suchBorrower or of any indenture, agreement or undertaking to which such Borrower is a party orbywhich the property of such Borrower is bound, or be in conflict with, result in a breach oforconstitute (with due notice and/or lapse of time) a default under any such indenture,agreement orundertaking, or result in the imposition of any lien, charge or encumbrance of any nature onany ofthe properties of such Borrower.          5.3 This Amendment and any assignment or other instrument, document oragreement executed and delivered in connection herewith, will constitute the legal, validand bindingobligations of each Borrower, enforceable in accordance with their respective terms,subject only tobankruptcy and similar laws affecting creditors’ rights generally.          5.4 There are no outstanding Defaults or Events of Default under any of theLoan Documents.          5.5 There has been no change which could have a Material Adverse Effect onany Borrower since the date of the most recent financial statements of such Borrower deliveredto
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Bank from time to time.     **6. EFFECTIVENESS CONDITIONS**          This Amendment shall not be effective until the following conditions have been met to thesole satisfaction of Bank (which satisfaction shall be evidenced by Bank’s counter-executionand delivery to ERC US of a fully executed counterpart of this Amendment):               (i) Borrowers shall have executed and delivered to Bank this Amendment.               (ii) Borrowers shall have paid to Bank, in immediately available funds, a non-refundablewaiver and amendment fee in an amount equal to $2,500, which fee is fully earned by Bank uponthe execution of this Amendment.     **7. REAFFIRMATION**          This Amendment shall be incorporated into and made part of the Loan Agreement. Except asexpressly modified by the terms hereof, all of the terms and conditions of the Loan Agreement,and all of the other Loan Documents, are hereby reaffirmed and shall continue in full force andeffect as therein written.     **8. RELEASE**          As further consideration for the agreement of Bank to enter into this Amendment, eachBorrower hereby waives, releases, and discharges Bank, all affiliates of Bank and all of thedirectors, officers, employees, attorneys and agents of Bank and all affiliates of suchPersons, from any and all known claims, demands, actions or causes of action existing as of thedate hereof, arising out of or in any way relating to this Amendment, the Loan Agreement, theLoan Documents and/or any documents, agreements, instruments, dealings or other mattersconnected with this Amendment, the Loan Agreement, the Loan Documents or the administrationthereof.     **9. MISCELLANEOUS**          9.1 Integrated Agreement. The Loan Documents and this Amendment shall beconstrued as integrated and complementary of each other, and as augmenting and notrestrictingBank’s rights, remedies and security. If, after applying the foregoing, an inconsistencystill exists, theprovisions of this Amendment shall control.          9.2 Severability. Any provision hereof, or of the Loan Agreement or any otherLoan Document that is prohibited or unenforceable in any jurisdiction shall be, as to suchjurisdiction, ineffective to the extent of such prohibition or unenforceability withoutinvalidating theremaining provisions hereof, and any such prohibition or unenforceability in anyjurisdiction shallnot invalidate or render unenforceable such provision in any other jurisdiction.          9.3 Non-Waiver. No omission or delay by Bank in exercising any right or powerunder this Amendment, or the Loan Documents or any related agreement will impair such rightorpower or be construed to be a waiver of any Default or Event of Default or an acquiescencetherein,and any single or partial exercise of any such right or power will not preclude other or further
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exercise thereof or the exercise of any other right, and no waiver will be valid unless in writingand signed by Bank and then only to the extent specified. Bank’s rights and remedies arecumulative and concurrent and may be pursued singly, successively or together.          9.4 Headings. The headings of any paragraph of this Amendment are forconvenience only and shall not be used to interpret any provision of this Amendment.          9.5 Survival. All warranties, representations and covenants made by Borrowersherein, or in any agreement referred to herein or on any certificate, document or otherinstrumentdelivered by it or on its behalf under this Amendment, shall be considered to have been relieduponby Bank. All statements in any such certificate or other instrument shall constitutewarranties andrepresentations by Borrower hereunder. All warranties, representations, and covenants made byBorrowers hereunder or under any other agreement or instrument shall be deemed continuinguntilthe Obligations are indefeasibly paid and satisfied in full.          9.6 Successors and Assigns. This Amendment shall be binding upon and shallinure to the benefit of Borrowers and Bank, and their respective successors and assigns;provided,that Borrowers may not assign any of its rights hereunder without the prior written consent ofBank,and any such assignment made without such consent will be void.          9.7 Governing Law. This Amendment, the Loan Agreement and the LoanDocuments shall be deemed contracts made under the laws of the State of the Jurisdiction andshallbe governed by and construed in accordance with the laws of said state (excluding its conflictoflaws provisions if such provisions would require application of the laws of anotherjurisdiction)except insofar as the laws of another jurisdiction may, by reason of mandatory provisions oflaw,govern the perfection, priority and enforcement of security interests in the Collateral.          9.8 **WAIVER OF JURY TRIAL****. TO THE EXTENT PERMITTED BYAPPLICABLE LAW, EACH BORROWER BY EXECUTION HEREOF AND BANK BYACCEPTANCE HEREOF, KNOWINGLY, VOLUNTARILY AND INTENTIONALLYWAIVES ANY RIGHT EACH MAY HAVE TO A TRIAL BY JURY IN RESPECT OFANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR INCONNECTION WITH THIS AMENDMENT, THE LOAN AGREEMENT, THELOAN DOCUMENTS OR ANY AGREEMENT CONTEMPLATED TO BEEXECUTED IN CONNECTION WITH THIS AMENDMENT OR THE LOANAGREEMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING,STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTYWITH RESPECT HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT TOBANK TO ENTER INTO AND ACCEPT THIS AMENDMENT.**          9.9 Counterparts. This Amendment may be executed in any number of counterparts and bydifferent parties hereto in separate counterparts, each of which when so executed and deliveredshall be deemed an original and all of which when taken together shall constitute but one and thesame instrument. Any signature delivered by a party by facsimile transmission or .pdf shall bedeemed to be an original signature hereto.**[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]**
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     IN WITNESS WHEREOF, the parties have caused this Amendment to be executed and delivered bytheir duly authorized officers as of the date first above written.     **BORROWERS:** **EMERSON RADIO CORP.**